The Big Blue from Bentonville relies on its supply chain for its enormous profitability. The company constructs enormous regional distribution centers and automate their inventory system (in part using RFID technology) to load trucks with exactly the products that a store is selling, and their trucks are dispatched at regular times on regular routes, replenishing supplies steadily and precisely, allowing the individual stores to eliminate storage space in favor of floor space. It's an impressive system, designed by Chief Information Officer Linda Dillman, the unheralded genius behind the company's ridiculous profits.

The other, more important element behind the Bentonville Monster's profitability is their ability to maintain a razor thin margin across a huge breadth of volume. The profit per unit sold is small--but the amount sold is enormous. Obviously, having an innovative supply chain is a critical part of this. The other part is pulling out all stops to keep labor costs down.

The company pulls this off by applying intense pressure on store managers to keep labor costs down by setting unrealistic downward expectations of labor costs. While they expect sales to increase, they expect labor costs to decrease--which any small businessperson could tell you is the opposite of reality. As a result, store managers feel pressured to do things like force workers to work off the clock, through their breaks, and split their checks to avoid overtime payments. Reports of cashiers wetting themselves for lack of bathroom breaks or going into diabetic shock as a result of blood pressure dips pop up in lawsuits all over the country. The indignity of at-will employment.

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